Asuncion Journal; A 2,000-Mile Highway of Water for Commerce

By JAMES BROOKE

Published: May 27, 1995

ASUNCION, Paraguay—
Entranced by visions of barges piled high with sugar, soy and wheat, Latin American businesses are pressing for construction of a 2,000-mile-long waterway that they say would be South America's liquid spinal cord.

The project, called the Hidrovia, or waterway, would speed shipping by straightening and deepening the Paraguay and Parana Rivers. It would open an outlet to the sea for Paraguay and Bolivia and would help the region's new Southern Common Market. The waterway, which could cost as much as $1 billion, would also run through parts of Brazil, Argentina and Uruguay.

President Juan Carlos Wasmosy of Paraguay, whose office here overlooks the brown, slow-moving waters of the Paraguay River, said the waterway would help the country overcome its sense of being landlocked. "Instead of barges carrying 500 tons, we would able to have barges carrying 2,000 tons," he said.

The Inter-American Development Bank is directing the project and would finance a major part of it with matching funds from the five countries involved if environmental approval is received.

But environmentalists fear that the river-dredging and channeling project would pull the plug on the world's largest wetlands, the Pantanal in Brazil, an area that is home to 600 bird species. Down river, it would cause flooding, they say.

"The five-country region can little afford the destruction seen in the Mississippi and Everglades," the Environmental Defense Fund, a Washington-based group, warned recently about the Hidrovia.

"If you cut through the river meanders and blow up the rocks, the river is going to run faster, and it's going to flood faster," warned RaulGauto, executive director of a leading environmental group here, the Moises Bertoni Foundation.

Scientists say the Pantanal wetlands act like a vast sponge, regulating the flow of rainwater into the Paraguay River. It now takes about six months for water to flow from the Pantanal to the Atlantic Ocean. Hydrologists argue that faster flows could expose down-river areas to flash flooding.

"Catastrophic flooding downstream becomes a real possibility," warned a recent study by Wetlands for the Americas, a conservation group based in Buenos Aires.

With fresh memories of billions of dollars in damage caused by the Mississippi floods of 1993, the Development Bank signed contracts in February for $10 million in engineering and environmental-impact studies for the project. Work could start late next year if an agreement can be reached.

Officials of Paraguay's National Port and Shipping Authority say the environmentalists are alarmists.

"For a long time, we have been dredging the river, from 5 feet down to 15 feet, and nothing has happened," said Eugenio Sanabria Cantero, director of the agency. He said the new project would benefit 17 million people in the region.

Some scientists challenge his contentions, though. After the Pantanal suffered its worst drought in 20 years last year, they questioned whether faster river flows from the dredging were already drying out the 50,000-square-mile marsh, which is considered the world's most biologically diverse wetland.

With a little more straightening, dredging and marking, the Paraguay River would be in shape to allow expanded barge convoys to sail at night. The larger and faster convoys could cut shipping costs in half and open up South America's heartland to new economic ventures, including soy farming for export in eastern Bolivia and iron and manganese mining in western Brazil.

The supporters of the Hidrovia also contend that the alternatives to the waterway could have a worse impact on the environment.

"The pollution caused by a barge convoy is nothing compared with building a highway through the forest and sending 300 trucks over it," said Juan Wenninger, Paraguay's Deputy Minister of Transportation.

In Brazil, the region's economic giant, businesses have been looking for alternatives to a steadily deteriorating highway network.

Only 2 percent of freight moves on waterways in Brazil, compared with 25 percent in the United States and 28 percent in Germany. But Sao Paulo State recently opened a 1,500-mile, $1.6 billion waterway that links Sao Paulo with Paraguay's second largest city, Ciudad del Este on the Parana-Tiete River system.

Indeed, businesses are already turning the Paraguay and Parana Rivers into a major economic artery.

The world's largest sugar refinery opened this year in Tangara, Brazil, and barges loaded with sugar are already floating down river to Argentina. In return, barges have been carrying Argentine wheat to markets up river. Other companies are shipping timber and diesel fuel.

Last year, Glencore, a Brazilian trading company, shipped 5,000 tons of soy from Caceres to the Atlantic. The company plans to ship 27,000 tons this year.

"Trying to stop the Hidrovia is not morally right, because so many people are going to benefit," said Mr. Gauto, the Paraguayan environmentalist. "But we should try to get on the ship, so we can steer the ship from the inside."

Photo: Businesses in Latin American are pushing for the construction of a 2,000-mile waterway that would improve river systems for five countries. Part of the project would deepen and straighten the Paraguay River, already an economic artery, on which a container ship docked recently at Asuncion. (John Maier Jr. for The New York Times) Map of Paraguay showing locations of the Paraguay and Parana rivers.